Payment Terms

New measures to help small businesses get paid on time

The government is stepping up the support it has given small businesses in New Zealand by introducing new measures to help them get paid on time.

A business payment disclosure regime is being established to improve information and transparency about business-to-business payment practices across the economy, the Minister for Small Business announced today , Stuart Nash.

“Small businesses make up over 97% of all businesses in New Zealand. Late payments have a negative impact, causing unnecessary stress and uncertainty, while extended payment times can cause real harm, especially when a supplier has no choice but to accept them on a “take it or leave it” basis, said Stuart Nash.

Large companies (those with annual revenue over $33 million) will be required to report publicly on their own payment practices, particularly late payments, and the time between receipt of invoices and payment integral. This information will need to be submitted every six months, which is in line with similar schemes in Australia and the UK.

“The Small Business Council’s Small Business Strategy has identified a number of challenges facing New Zealand’s business community and the government is committed to helping.

“Small businesses are less resilient to bad payment practices because they are not as well equipped or resourced to support such practices. Many businesses are also reluctant to demand prompt payment for fear of damaging relationships. Bad practices payment can effects the wider economy, especially in times of economic uncertainty.

“Big businesses will also be required to publish information about payment practices on their own websites, which will provide another layer of transparency. Those who do not disclose information about payment practices may be subject to notice of compliance and penalties.

“The Business Payment Practices Disclosure Regime will help small businesses decide who to do business with and encourage larger businesses to improve their payment practices to manage any reputational risk,” said Stuart Nash.

Further consultations with the business community will take place in the coming months on specific reporting measures.

(With contributions from the New Zealand government press release)